Over half of the modeling department was laid off. These are the people who make the rating models and stuff.
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Multiple actuaries did indeed get fired.
GEICO is a dinosaur in a changing COVID landscape. They outsource innovation and are always behind the curve chasing industry trends. They hire yes-men to execute orders. Spending money on marketing no longer works in moving the needle. Small competitors that they once ignored like Elephant and Root are eroding marketshare with refined telematics. They are, however, Buffet's darling and will not be spun-off or sold.
I was one of the ~80 associates laid off. As far as know, no associates actually working as actuaries were fired, though some of the "modelers" had also taken exams.
It wasn't because of telematics, or at least not in a way that makes sense. Telematics creates numbers, and those numbers need to be interpreted to be a price. The Modeling and other research associates let go had the skills to do so. So, this will make it much harder to implement, price, and improve a telematics product at GEICO.
A better theory? GEICO is being prepped for sale (or otherwise spun off). The company has struggled to grow in 2021, Progressive IS growing, so its either spend years improving tech, or sell when growth is almost maxed out. R&D is expensive for long term growth, so its the first to go to make the balance sheet look better.
Although the Telematics comments ring true, GEICO is far from having a stable Telematics product and was one of the last big insurers to offer it. It's something more subtle and shady going on. GEICO's known for quite some time that a shake up was coming but has dragged it's feet to stay up on the times. A lot of poor management and use of resources is more to blame for these layoffs, not strictly the changing landscape of insurance.
Telematics - the tech used to monitor real time driving patterns - is turning insurance on its head. You don't need actuaries any more. No predictions are necessary because the computer can do it for you - and more accurately than humans. This means anyone with access to this technology can insure cars. For instance, car manufacturers can offer their own policies to go with the car payments. So could your cell phone company because this tech can be easily uploaded to your phone.
Plus, the "best" drivers who have the lowest accident (and fraudulent) claims, while typically carrying higher coverage limits, which are usually white collar, college educated workers, can now work from home permanently. They do not need a car as often as they did before.
The writing is on the wall: insurance is not the safe and stable job industry it was before. Huge companies, like GEICO, need to trim the fat FAST. Massive disruption is coming soon.
That's insane! Know what's the reason? Is it because they shift the function towards data science team?
What the heck?? Aren’t actuaries the ones that don’t ever get let go? What happened?